Alibaba’s Jack Ma has warned that the ongoing US-China trade war could last at least 20 years. As we’ll see, it’s actually more like 30 – up to 2049, the 100th anniversary of the foundation of the People’s Republic of China (PRC).
Steve Bannon always boasted that President Trump was bound to conduct a “sophisticated form of economic warfare” to confront China.
The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and “play by the rules.”
The Trump administration plan – which is, in fact, trade deficit hawk Peter Navarro’s plan – has three basic targets:
- Displace China from the heart of global supply chains.
- Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products.
- Force multinational corporations to stop doing business in China.
The overarching concept is that unending confrontation with China is bound to scare companies/investors away.
There’s no evidence South Korean or German conglomerates, for instance, would withdraw from the vast Chinese market and/or production facilities.
And even if the Flight Away from China actually happened, arguably the American economy would suffer as much, if not more, than China’s.
The latest US tariff volley may lower China’s GDP by only 0.9 percentage points, according to Bloomberg Economics. But China may still grow a healthy 6.3% in 2019.
This is a decent overview, with numbers, of what the trade war might cost China.
What’s certain is that Beijing, as confirmed by a rash of editorials in Chinese state media, will not just play defense.
Beijing sees the trade war as “protracted.” A Commercial Cold War 2.0 atmosphere is now in effect but China is fighting the ideological war on two fronts. At home, Beijing is using strong language to define its position against the US but taking a significantly softer approach in the international arena.
It’s extremely helpful to understand how the current situation has arisen by examining the work of Wang Hui, a professor of Chinese language and literature at Tsinghua University, top essayist and the star player of China’s New Left.
Hui is the author of the significant The Rise of Modern Chinese Thought, published in 2005 and still without an English translation.
Some of Hui’s key conclusions still apply 13 years later, as he explains how Chinese society has not yet adapted to its newfound status in international relations; how it has not solved the “accumulated contradictions” during the breathtakingly fast process of marketization; and how it still has not mastered the inherent risks in the globalization drive.
Hui’s analysis is echoed in many a Chinese editorial including delicious throwback lines such as the “sharpening of internal contradictions” in international relations. After all “socialism with Chinese characteristics,” as codified by Deng Xiaoping and renewed by Xi Jinping, excels in exploiting and bypassing “internal contradictions.”
It’s all about BRI
Jack Ma, also hinted at a bigger picture, when he said that to counter the trade war, China should focus exports across the New Silk Roads/Belt and Road Initiative (BRI), specifically mentioning Africa, Southeast Asia and Eastern Europe.
Five years after President Xi launched BRI – then named One Belt One Road (OBOR) – in Astana and then Jakarta, it’s only natural that Ma concentrates on what I have emphasized to be the primary Chinese foreign policy strategy for the next three decades.
It’s never enough to stress that BRI’s six main connectivity corridors, spanning up to 65 nations, according to the original timetable, are still in the planning stage up to 2021. That’s when actual implementation starts, all the way to 2049.
Ma alluded to BRI expansion across strategically positioned nations of the Global South, including Central, South and Southeast Asia as well as Africa and Eastern Europe.
Quite a few of these nations have been extremely receptive to BRI, including 11 that the UN describes as Least Developed Countries (LDCs), such as Laos, Djibouti and Tanzania. BRI projects – and not World Bank projects with strings attached – represent the solution to their infrastructure woes.
Thus we see Beijing signing memorandums of understanding (MOUs) for BRI projects with no less than 37 African nations and the African Union (AU).
As BRI is closely interlinked with the Asian Infrastructure Investment Bank (AIIB), the bank will handle financing for BRI projects in Indonesia.
And the US-China trade war extrapolates to third countries such as Brazil profiting in terms of its commodities exports.
China is slowly but surely attempting to master the fine-tuning of financing complexities for projects in multiple connectivity corridors – including those in Bangladesh, Pakistan, Myanmar and Kazakhstan. At the same time, Chinese companies keep an eye on a political deal that will have to be brokered by the Shanghai Cooperation Organization (SCO) to unlock the BRI integration of Afghanistan.
In cases of nations excessively exposed to Chinese investment – such as Laos, Djibouti, Tajikistan and Kyrgyzstan – China is deploying a range of financing options from debt relief to clinching long-term contracts to buy natural resources. Whether China will leverage financing of strategic deep-water ports in Myanmar and Djibouti to build a “string of pearls” dotting the Indian Ocean supply chains is pure speculation.
A key vector to watch is how Germany and France approach BRI’s inroads in Central and Eastern Europe, for instance, via the Budapest-Belgrade high-speed rail linked, BRI-style, to Piraeus port in the Mediterranean. Italy is in – the Adriatic is connected to BRI. Germany is in with arguably BRI’s key European terminal in the Ruhr valley. France, however, dithers.
Russia is also in. Nearly 70 projects are being co-financed by BRI and the Eurasia Economic Union (EAEU). The Vladivostok forum once again proved the Russia-China strategic partnership, and its BRI/EAEU extension is in full effect.
A flimsy developed strategy by the Quad (US, India, Japan, Australia) has no potential to derail BRI’s reach, complexity, wealth of capital and human resources.
For all the financial/soft power challenges, BRI participant nations, especially across the Global South, are locked on their side of the Chinese infrastructure investment “win-win” bargain. The current, relentless BRI-bashing is not only myopic but irrelevant, as BRI, constantly fine-tuned, will keep expanding all the way to 2049. What it will certainly face is a 30-year trade war.
Rajeev Chawla Memon ka bacha, somebody retired in Canada can’t have an opinion? Other than the party line?…..main teree bhund maran……
Then why isn’t Trump praised by the Chinese government?
The greatest irony and fallacy of trumps tariffs is that it may actually make China’s position in the world stronger. If they want to export to the US all they have to do is simply move manufacturing to the countries where they are building projects which will then produces the jobs that allow these people to buy the things that they want to ship to them in the first place. As for domestic consumption and the rest of the world, they can produce it in China. I do not see how this leaves the United States in a good position? What is trump thinking?
"The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and “play by the rules.”" Rules, What rules? American does not have rules, the only rule the American has is to tear up rules at will, at the blink of eye, or bomb, kill and waterboard on the fabricated phantom WMD allegation as humanitarian intervention.
Draw red lines around the American and chop their toes off if they step outside the red line is the only way to teach the American "play by the rules."
Yashad Rizvi Racist attitudes exist in Nonbuddhist countries like Malaysia and Indonesia and often promoted by nationalist government for political gain. In South Asia, there is India but Indians are notoriously racist, killing and raping NE Indians who are fairer and look Han. Having invaded and annexed Sikkim and South Tibet (Arunachal Pradesh), which like Indian-held Kashmir there are many areas in virtual lockdown where foreigners are not allowed, yet there is little international outrage due to India’s alliance with US, while China’s Tibet is hyped to death but amazingly open to all tourism.
"2. Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products."
With what resources? As the author correctly points out, "A flimsy developed strategy by the Quad (US, India, Japan, Australia) has no potential to derail BRI’s reach, complexity, wealth of capital and human resources."
To allocate infrastructure is not as simple as allocating financial capital: you can’t just teleport roads and industry and educated people from China to India just because you want to.
This "Indo-Pacific" mantra reminds me of the Malaysia thing in the 90s, when neoliberals spoke a lot about how Malaysia would be the outsourcing solution to China by the American elite.
I think we can expect you wumaos to make up more fake news. Do you know (for example) that hard working ethnic Chinese are 2nd class citizens in all of SE Asia ? What is comrade Xi doing about this ?
Rajeev Chawla He’s an ‘odd’ one to be sure.
@Syed fazal abbas – you fit the saying perfectly "jis ki thaali me khaya usi me thooka" in english – “to bite the hand that feeds you” Must be a torture for you!
I don’t know about 30 year trade wars, maybe so, but I would need more evidence.
What I find interesting is how China is deploying and encouraging OBOR under today’s conditions which were completely unpredictable in 2013 when it was announced.
Then, China was faced with Obama’s (actually a long term war state objective) "Pivot to Asia" and the likely ratification of TPP. That is the world anticipated, what has happened has opened many opportunities for OBOR and China is now taking advantage. Things are bound to be ought up in the rapid presentation of opportunity. It seems to me that OBOR is far ahead of where they had planned, which, no doubt, will cause confusion and headaches.
I think we can expect of China more deals like the one it is making with Japan for development projects in Vietnam and other places. Co-development with a third country shows China is not hegemonic and nullifies the "debt diplomacy" canard.
I have always been curious about which side knew what when Obama’s "Pivot" and Xi’s OBOR announcements were made so close together in time.
I’ve often wondered about this BRI…. it will cross some real bandit country and will require alot of soldiers to keep it from being attacked or ransomed.
Must make you very bitter, living in N American and forced to lick the backsides of the gweilos for your living.
Don’t you have anything better than "racism"? It’s so worn out an insult that it might soon become a term of honor…
I am not ashamed of being white as I am not ashamed of being a man, Roman Catholic, taller than six foot or father of five… Why should I be ashamed or why should I feel guilty of being white? If this is your definition of being a racist, I confess I am one.
But I do not judge people according to the color of their skin or the slantness of their eyes.
I judge people according to their actions. And according to the consequences of their actions.
Let’s take, for instance, Korea.
In 1950, the Chinese decided to keep alive the socialist North.
Results? Abject poverty and abject serfdom for a people of 25 millions. While the South, under the humiliating leadership of the tyrannical United States, became one of the world’s industrial powerhouses. 40,000 PPP dollars GDP per capita. The North is not even in the statistics, but estimates say something about 1,500 GDP per capita.
Exactly the same people, exactly the same initial conditions, only 70 years, but some under the Chinese, the others under the Americans.
Difficult choice…
Maybe ridiculous is more accurate.
Funny US foreign policy…
Wukong,
The engineers made it to many’s surprise. But it really has become a reality now. In contrast, I doubt hydrogen technology will become applicable anytime soon because it has a fundamental flaw even in theory, which is the generation of hydrogen takes as much energy/cost. It’s like you climb the mountain in order to exploit the height potential difference. Of course, it is absolutely clean energy when you slide down, but the climbing requires as much energy/cost too.
Teddy West
"But keep in mind that the difficult Chinese language and the ethnocentric Chinese approach (a non-Han is by default a "foreign devil") might not be the answer to mankind’s most secret desires…" 1. Relatively speaking, Chinese are much kinder to the foreigners(non-chinese) than the Anglosaxons.
2. As to the han/non-han thing, I guess the distinction is made by non-chinese rather by chinese. For chinese, Han is simply majority and non-Han is the fifty something other minorities and they are part of the chinese family from the long history.
I think you are extrapolating your own racism to chinese. But in reality, things are not the way you little brain think.
China had a promising capital market in the 13th century. Marco Polo witnessed it. Why did it take so long to master the fine-tuning of financing African projects.
China had the chance to develop a world empire in 1420. We are endlessly bombarded with stories about balls challenged AZH (Admiral Zheng He) and his outstanding fleet… Now China finally will develop an (economic) colonial empire Good luck!
China wants to unite Eurasia (the famous Beijing – Moscow – Berlin axis of virtue) as a counterweight to the Anglosphere. Good luck with that! It’s a 230 years project, not only 30.
But keep in mind that the difficult Chinese language and the ethnocentric Chinese approach (a non-Han is by default a "foreign devil") might not be the answer to mankind’s most secret desires…
60 years ago there were 2 Communist powers.
USSR, flush with its Sputnik caper promised to bury Capitalism 6 feet under. Mao the wise told his people to concentrate on building their country, ignore America the "paper tiger".
And that was well before America’s Korea stalemate, Viet-Nam rout, 9/11, fake WMD, Iraq quagmire, Abu Ghraib, Guantanamo, AF-Pak debacle, rise of BRICS, Arab spring, Jihad challenge, irrelevance of EU and Israel, loss of Iran and Pakistan as assets and allies, financial meltdown, debt, depression, despair, bigot Trump hell-bent on replacing baseball with pussy-grabbing as US national sport, and XI’s BRI/New Silk Road quest for world peace and Dialogue of Civilizations.
In fact, Mao was being generous. America has turned out to be a paper cat, nay a paper mouse. The world is taking Mao’s advice and ignoring America.
The writer pointed out rightly that the US goal is to kill China and the US is willing to pay "the price". The reason I quoted "the price" is that this price is being under-estimated by the US hawish and "the price" is more likely to be the collapse of the US Empire.